Author Question: Assume that one of two possible outcomes will follow a decision. One outcome yields a 75 payoff and ... (Read 61 times)

sc00by25 · **on:** Jul 1, 2018

Assume that one of two possible outcomes will follow a decision. One outcome yields a 75 payoff and has a probability of 0.3; the other outcome has a 125 payoff and has a probability of 0.7. In this case the expected value is

A) 85.
B) 60.
C) 110.
D) 35.

Question 2

Suppose your utility function for food (F) and clothing (C) is u(F,C) = F + 4C. If you reduce your clothing consumption by 2 units, how much do you have to increase your food consumption in order to maintain the same utility level?

A) 2 units
B) 4 units
C) 6 units
D) 8 units